by Robert Hsu | April 12, 2012 11:58 am
The behind-the-scenes upheaval in the Chinese government will have implications for U.S. based companies with Asian, and more specifically, Chinese operations, or those that depend on Chinese consumers for growth.
Here is a look at recent developments in the market for 5 of the companies we follow:
Paragon Financial Limited issued a report arguing that Agrium (NYSE:AGU) should gain on rising corn and oilseed prices. The weaker-than-normal oilseed supply due to South American droughts is responsible for pushing up prices, which should entice North American farmers to devote more acreage to growing the crops. Corn and oilseeds demand more fertilizer than most crops, so farmers who switch will be spending more money on products like Agrium’s.
Apple (NASDAQ:AAPL) supplier5 U.S. Stocks To Follow in China Hon Hai Precision Industry also known as Foxconn, announced plans to raise the wages of employees in Taiwan “significantly” following several employee suicides in 2010 and a fatal explosion at one of their plants in 2011. The company, which employs more than 1 million people in China, had already raised the salaries of all of its assembly line workers in China since Feb. 1 and made improvements to its facilities that include safety nets in worker dormitories. I think the Foxconn plans would improve public perception of both Apple and Foxconn.
Las Vegas Sands‘ (NYSE:LVS) gambling revenue for Macau last month increased 24.4% year over year to $3.1 billion, in line with analyst expectations. The key driver of growth in Macau’s gambling market is still the steady flow of gamblers from mainland China. Wall Street analysts are forecasting a growth rate of 11% to 25% for 2012. I agree with this projection.
At the Boao Forum for Asia Conference on Sunday, John Culver, president of the China and Asia Pacific branch of Starbucks (NASDAQ:SBUX), confirmed that Starbucks is planning to expand China into its second-largest market by 2014. He claimed that Starbucks will exceed 1,500 stores across China by 2015. Starbucks successfully expanded into 13 Chinese cities during fiscal year 2011 and opened a store every four days, on average.
Sina (NASDAQ: SINA) resumed its comment function for its micro blogging service after a three-day-long ban. Following the coup rumors I discussed last week, Sina and other similar services were ordered to suspend the ability of users to comment on messages posted by other readers for three days. While the stock is down over the past week, I don’t think the ban has a meaningful negative impact. Sina’s micro blogging remains the leading public communication channel in China.
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